TMI Blog2020 (12) TMI 164X X X X Extracts X X X X X X X X Extracts X X X X ..... was further stated that the Officers of the Department must not take advantage of ignorance of an assessee as to his rights. In the light of the above CBDT Circular No. 14 dated 11.04.1955, the fact that the assessee inadvertently did not set off the business losses and unabsorbed depreciation of AY 2002-03 to AY 2004-05 against the remaining business income (after claiming deduction u/s. 10A) and Income from other sources of the subsequent years does not obviate the duty of the assessing officer in rectifying the said mistake and allowing set off for the same. If an assessee makes a mistake in submitting to be assessed on a particular income before the assessing authority, he is not estopped or precluded by law from preferring an appeal and showing to the appellate authority that the income is, in fact, either wholly or partly, not exigible to tax. If such a contention is taken, it is the duty of the appellate authority to examine the matter and determine the proper tax leviable. Hon'ble Karnataka High Court in Wipro Limited v. DCIT [ 2015 (10) TMI 826 - KARNATAKA HIGH COURT ] had held that claims not made in the return of income are also allowable by the assessing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he I.T. Act and thereafter, set off of earlier years losses against the remaining business income of ₹ 4,88,322. The income of other sources of ₹ 8,19,043 was offered to tax. In the said return of income filed, the assessee had inadvertently omitted to set off earlier years unabsorbed depreciation with the income of other sources of ₹ 8,19,043. In this context, it is relevant to mention in respect of earlier assessment years, viz., assessment years 2002-2003, 2003-2004 and 2004-2005, the assessee had business losses and unabsorbed depreciation which was not set off with the income from other sources for those respective years. The income under the head income from other sources for these assessment years were offered to tax and business losses and unabsorbed depreciation were carried forward to subsequent years for set off. It was stated that these losses and unabsorbed depreciation were properly claimed in the return of income and the said returns were filed within the due date of the respective assessment years. The details of business losses/unabsorbed depreciation for assessment years 2002-2003 to 2004-2005, we shall narrate in the course of the order. 5. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIT(A)'s order vide order dated 28.03.2017, wherein he had not given the benefit of set off of brought forward losses against the total income. It was claimed by the assessee that there was unabsorbed depreciation/losses, which ought to have been set off with the income from other sources while passing the order giving effect to the CIT(A)'s order. The assessee on receipt of A.O.'s order dated 28.03.2017, filed another 154 application on 19.06.2017 (refer page 97 to 105 of the paper book). It was submitted by the learned AR that the rectification application was not disposed of. 6. In the meanwhile, aggrieved by the order of the Assessing Officer (order giving effect dated 28.03.2017), the assessee has filed appeal before the first appellate authority. The CIT(A) rejected the appeal of the assessee and confirmed the view of the Assessing Officer. The CIT(A) held, since the set off of brought forward losses/unabsorbed depreciation was not the subject matter of the decision by the appellate authority, the A.O. has rightly not entertained the plea of the assessee. It was further held by the CIT(A) that though the assessee has filed an application u/s. 154 of the I. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (73,16,524) - - - 29,74,058 29,74,058 2004-05 (99,35,330) (1,08,54,567) (2,07,89,897) - - - 11,40,822 11,40,822 2005-06 46,66,667 - 46,66,667 41,78,345 4,88,322 4,88,322 8,19,043 8,19,043 2006-07 4,58,86,633 - 4,58,86,633 4,01,72,120 57,14,513 - 7,48,850 64,63,363 2007-08 6,83,62,057 - 6,83,62,057 6,12,54,692 71,07,365 - 24,32,487 95,39,852 2008-09 3,73,66,826 - 3,73,66,826 2,07,16,012 1,66,50,814 63,59,649 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtions of section 72(1)(i) is reproduced hereunder. 72. (1) Where for any assessment year, the net result of the computation under the head Profits and gains of business or profession is a loss to the assessee, not being a loss sustained in a speculation business, and such loss cannot be or is not wholly set off against income under any head of income in accordance with the provisions of section 71, so much of the loss as has not been so set off or, where he has no income under any other head, the whole loss shall, subject to the other provisions of this Chapter, be carried forward to the following assessment year, and- (i) it shall be set off against the profits and gains, if any, of any business or profession carried on by him and assessable for that assessment year; (ii) if the loss cannot be wholly so set off, the amount of loss not so set off shall be carried forward to the following assessment year and so on: 9.4. Thus, section 72(1)(i) mandate set off of business loss with business income of a subsequent year. It is a statutory compulsion. It does not give any option to assessee to set off or not to set off. In other words, whether or not the assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t with earlier and in the overall scenario unfolded by the provisions of Section 10A the aforesaid discord can be reconciled by understanding the expression total income of the assessee in Section 10A as 'total income of the undertaking'. 18. For the aforesaid reasons we answer the appeals and the questions arising therein, as formulated at the outset of this order, by holding that though Section 10A, as amended, is a provision for deduction, the stage of deduction would be while computing the gross total income of the eligible undertaking under Chapter IV of the Act and not at the stage of computation of the total income under Chapter VI. All the appeals shall stand disposed of accordingly. 9.7. Thus, in view of section 72(2)(i), 32(2) and the aforesaid judgment of the Hon'ble Supreme Court, the business loss and unabsorbed depreciation of AY 2002-03 to AY 2004-05 ought to have been set off against the business income remaining after claiming deduction under section 10A and against the Income from other sources of the subsequent years. 9.8. The CBDT Circular No. 14 dated 11.04.1955 states that the income tax authorities are required to bring to the notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a notice issued under subsection (1) of section 142, discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. The said provision refers to a return under sub- section (1). Sub-section (1) of section 139 provides for filing of a return of income on or before the due date, furnishing a return of his income or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed. If in such return the assessee discovers any omission or any wrong statements therein which has to be necessarily with reference to his income and if it is sought to be corrected, then it could be done only by resorting to a revised return under section 139(5) of the Act. The income contemplated by section 139(1) of the Act can only be the income which the assessee bona fide believes to be his income and not the income as finally assessed by the Assessing Officer. On the discovery of omission or wrong statement in the ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deration the said letter where the assessee is claiming tax creditor relief and decide whether the assessee is entitled to such relief out of the tax liability on the total income in respect of which he has filed the return under section 139(1) of the Act. As the tax liability is fastened on the assessee on the basis of the statutory provisions, if any statutory provision gives the assessee the tax benefit, the assessing authority is legally bound to consider the same and grant him relief. In the course of assessment the said claim cannot be rejected on the ground that the same is not made in the return filed under section 139(1) and on the ground that no revised return is filed under section 139(5) of the Act. What the assessee is claiming by way of a letter is to bring to notice of the assessing authority the statutory provisions as well as the provisions of the double taxation avoidance agreement under which the assessee is entitled to claim tax benefit, as the said benefit of tax was not claimed in the return filed under section 139(1) of the Act. Once the assessee files the necessary particulars and claims relief under the provisions of the double taxation avoidance agreement, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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